Leasing Commercial Real Estate
A simple guide on how to go about leasing commercial office space.
Planning and BudgetsThe best way to begin is by sitting down and figuring out your plan and budget. What kind of business are you going to open? How many people will work in my space? Do I need offices, conference rooms, warehouse space? These are questions you need to ask yourself. You also need to develop a budget. How much money will it take to get a space up and running? How much rent can I afford to pay? As a rule of thumb, the nicer the area, the higher the rents. Usually you will need additional money on hand to pay for additional build-out and improvements.
Hire a Commercial Real Estate AgentIt is a good idea to engage the services of a commercial real estate agent. They can give you information on lease rates for the type of space you need which can certainly help with your budgeting. Additionally, they can help you with site selection and help negotiate a letter of intent with the landlord. They can help set up tours to see your spaces and experienced agents can provide you with additional help calculating your real needs.
Things to ExpectFinding space, especially if you are on a tight budget, can take a lot of time. As a rule of thumb, expect to spend 3 to 6 months finding a space, 2 months to negotiate the LOI and the lease itself, and 2 months to make changes to the space if needed. Expect the landlord to ask for your financial information as well as a personal guarantee depending on the size of your company.
Hire an AttorneyJust like it is a good idea to hire a commercial real estate agent, it is a great idea to hire an attorney to negotiate the lease itself. The lease is actually a contract between you and the landlord. In most, if not at states, it is against the law for commercial real estate agents, unless they are an attorney, to draft or make changes to a lease. Most commercial real estate leases are for 5 years. 5 years is a long time to suffer under a poorly drafted lease. Landlord frequently stuff provisions into leases that can be costly or unfair to a tenant. State laws generally have far fewer protections for commercial tenants as compared to residential tenants.